Stef's Blog - a native London Southlander and unrepentant 'Conspiraloon™' who doesn't trust anyone, not even himself. Sometimes I take pictures. I also enjoy swearing immensely and think much faster than I can type, so each post comes guaranteed to include at last one confusing typo. OK?

Thursday, August 11, 2011

The Real (sic.) Source of the British Riots

I don't personally agree with everything Stefan Molyneux says or implies in the following bout of right wing libertarian axe-grinding but I still think it's worth a spin...

The interesting parts for me are not the assertions I agree with but the assertions I disagree with - and asking myself why I disagree with them

this relentless RW libertarian harping on about 'markets' for everything, attempting to reduce all human interactions to traded commodities gets on my tits

but Molyneux does refer to points which are not being made much elsewhere - the UK's 'Treasure Island' status for corporate retailers and tax harvesters/ rentiers, the 300+ to 0 scoresheet for deaths in custody vs convictions for illegal killing, the suggestion that whatever people in the UK are experiencing is chicken shit compared to what's being done in their name overseas...

just between you and me, the pundit expressing opinions on the causes of the riots most similar to my own is Max Keiser but I reached a point where I couldn't bear his self-serving silver and AGW ramping any longer

though I note he steers clear of the AGW ramping on other peoples' shows presumably because he knows the pounding he'll take - which at the very least demonstrates that he's a shifty fucker

Economist Nourial Roubini—famous for having accurately predicted the financial meltdown in 2008 that lead us to our current situation—gave an interview to Wall Street Journal in which he affirms what Death and Taxes’ own DJ Pangburn often calls capitalism’s schizophrenia: The 2 sides of the marketplace, sellers (companies) and buyers (consumers), have directly conflicting self interests. Both are individually motivated to save and stockpile cash. But the more companies save the less they hire, hence the less money flows into the hands of workers, hence the less money they spend and the less money therefore flows back to companies. Meanwhile, the more consumers save the less they spend, and the less they spend the less money companies have and the less confident they feel about hiring, and hence the less money flows back into the hands of consumers.

It’s a Mexican standoff.

In a particularly bleak assessment, Roubini suggests that the current craziness in the markets may be the result of almost a century of trying to bargain our way out of a notion that’s been chasing us down since the Great Depression and which we’ve been barely outrunning: that markets, quite simply, might not work.“Karl Marx had it right,” Roubini says. “At some point capitalism can self-destroy itself. We thought that markets work. They are not working. What’s individually rational… is a self-destructive process.”

I'm wondering how much of a comparison there is between the Peasants' Revolt and the Chavs' Revolt. Peasants were an integral part of the economy of medieval society; unfortunately, Chavs are an integral part of the economy of the UK. We've created a huge underclass from which the middle classes feed. Consider the benefits that the unemployed receive, the largest beneficiaries of these benefits are the middle classes. A transparent example of one such benefit is housing benefit, the money never touches the claimant's pocket, instead going to some greedy/grubby landlord. The education of these people is not for their benefit but for the benefit of people earning money out of doing it (or at least going through the motions of it). The same can be said for health care and the provision of all statutory entitlements eg housing etc.

Lastly, my deliberate use of the word Chav. I regard it as akin to the word nigger in the US; a term used so that people can be hamstrung from the off. A legitimated form of contempt.

Roubini's opinion are supposed to carry more weight because he was the economic genius who predicted the 2008 crash

Which doesn't impress me much as plenty of people, yours truly included, saw it coming

There's so much wrong with that Roubini interview I'm not sure where to start

Hmmm, so the markets have locked up because companies and consumers are stockpiling cash?

Funny, I was under the impression that people were skint because inflation is going through the roof and ordinary peoples' income isn't. People were making up the difference with credit, but that's maxed out now, even with record low interest rates

And the wealth hasn't all disappeared into the industrial capitalists' pockets. It's being hoovered up by the finance capitalists and rentier class

Marx may or may not have been right about capitalism's inherent flaws but what's going on right now is outright, deliberate thievery; not the conclusion of some mathematical progression

Another is example is the changing role of local councils as they axe front-line (working class) staff but retain their management teams. Council tax payers are forking out ever-increasing amounts of dosh for what is becoming precisely fuck all in the way of services

So, then the question becomes who does the council exist to serve? The people or its managers?

@gyges I think the demonisation of the working class has been prevalent in British culture since the defeat of the miners culminating in Blair's 'everyone is middle class now'. A review of a couple of books that attempt to understand this phenomenon:

Chapter 1 of the Communist Manifesto:The history of all hitherto existing society is the history of class struggles.

Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.

In the earlier epochs of history, we find almost everywhere a complicated arrangement of society into various orders, a manifold gradation of social rank. In ancient Rome we have patricians, knights, plebeians, slaves; in the Middle Ages, feudal lords, vassals, guild-masters, journeymen, apprentices, serfs; in almost all of these classes, again, subordinate gradations.

The modern bourgeois society that has sprouted from the ruins of feudal society has not done away with class antagonisms. It has but established new classes, new conditions of oppression, new forms of struggle in place of the old ones.

Our epoch, the epoch of the bourgeoisie, possesses, however, this distinct feature: it has simplified class antagonisms. Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other Bourgeoisie and Proletariat.

From the serfs of the Middle Ages sprang the chartered burghers of the earliest towns. From these burgesses the first elements of the bourgeoisie were developed.

IMO people aren't spending, they are using the little cash they have spare to pay off mortgages and credit cards and fear of unemployment leads to stashing away as much as possible for the inevitable.

To categorise Marx's analysis of Capital as merely a mathematical progression is disingenuous. Capital contains inherent contradictions which Marx revealed, including booms and bust. 'Deliberate thievery' is inherent to Capital via exploitation and Imperialism. Whether markets can recover is questionable without the sort of pauperisation experienced in the 20's and 30's.

In these crises, writes Marx, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of over-production.

Capitalism has produced too much! Not too much to satisfy the world's population - poverty and starvation persist - but too much to be sold for an acceptable profit.

Just how many goods there are was revealed by the rioters and looters - and we could produce for need not profit - there are plenty of goods available but going unsold!

Capital is uncertain whether government's can make the poor pay enough for this present crisis (Greece, Spain, Ireland etc) so don't be surprised to find the true face of finance capital, fascism, just waiting in the wings.

Did you listen to the actual interview rather than the somewhat imperfect summary? I did

The masses aren't stockpiling cash, they're just taking on less debt. The value of what money they have is being aggressively eroded through central banks giving speculators cash to drive up commodity prices

Roubini's blowing smoke

And I'm not reducing all of Marx to a mathematical expression I'm talking about the specific prediction Marx made about over-production killing capitalism. That's not what's behind the current economic market turmoil. It's down to the excesses of finance capital not industrial production

Under capitalism, in a future where automated factories could meet all our material needs without any labour component, how could the ex-factory workers earn the money to pay for the goods?

That's a fundamental question, sure enough but, at the moment, I'm more focused on the multi-trillion derivative bubble and acts of brazen larceny taking place in broad daylight. Roubini apparently isn't

Debt as the basis for any economy, whether domestic or global, appears to be at the root of his analysis, and the fear of further debt traps.

Whatever way you choose to look at this Marx is pointing to the basis of Capital as being profit: from where or rather whom will Capitalism extract this profit?

I think Roubini's analysis is honest, he understands that taxation was what what replaced the gold standard when the Bretton Woods agreement was terminated by the US. Without higher taxation (which he has described as at 14% rather than 19% for stability) there is no way out for the US, of course the US has recently voted this down preferring to make the poor pay by cuts in social welfare.

My own memory is that socialist idealism after World War II was world-weary in seeing nation states as the instruments for military warfare. This pacifist ideology came to overshadow the original socialist ideology of the late 19th century, which sought to reform governments to take law-making power, taxing power and property itself out of the hands of the classes who had possessed it ever since the Viking invasions of Europe had established feudal privilege, absentee landownership and financial control of trading monopolies and, increasingly, the banking privilege of money creation.

My UMKC colleague, Prof. Bill Black commented recently in the UMKC economics blog: “One of the great paradoxes is that the periphery’s generally left-wing governments adopted so enthusiastically the ECB’s ultra-right wing economic nostrums – austerity is an appropriate response to a great recession. … Why left-wing parties embrace the advice of the ultra-right wing economists whose anti-regulatory dogmas helped cause the crisis is one of the great mysteries of life. Their policies are self-destructive to the economy and suicidal politically.”[8]

Greece and Ireland have become the litmus test for whether economies will be sacrificed in attempts to pay debts that cannot be paid. An interregnum is threatened during which the road to default and permanent austerity will carve out more and more land and public enterprises from the public domain, divert more and more consumer income to pay debt service and taxes for governments to pay bondholders, and more business income to pay the bankers.

If this is not war, what is?

I don't see a lot of difference in the substance of their arguments or the conclusions they draw.

I've acknowledged inherent flaws in capitalism (which isn't the same thing as endorsing a planned economy)

And no you certainly can't keep shifting income to capital away from labour indefinitely

But I take exception to Roubini depicting the current economic turmoil as being a result of producers and consumers hoarding cash (in this case, a euphemism for not taking on more debt)

The people who are sitting on mounds of actual cash are Roubini and his zillionaire clients in the financial speculator class

In that interview Roubini downplays the role played by the finance capitalists. For example, he refers to the probability of QE3 and QE4 (gifting money to the banking system) and uses the euphemism 'monetary easing' with barely any comment at all

At one point the interviewer asks Roubini point blank 'The US' fiscal woe at present - whose fault is that?' and Roubini answers 'George Bush'

For feck's sake

Roubini then goes on to say that Obama needs to undertake *more* fiscal stimulus - which in recent years has become another euphemism for printing money and giving it to the banks

Contrast with Hudson who talks about deliberate agency as well as structural issues, the wilfull destruction and looting of the tangible economy by finance capitalists, the evils of a rentier economy and neo-serfdom, and the moral and pressing need for debt default

...and, personally, I wouldn't point to well stocked shops as being proof of a crisis of capitalism

If there was sod all available to buy would that be proof of its success?

The fact that shops are largely stocked with old tat which will break down or become out of fashion before you get back home *is* evidence of capitalism destroying its surpluses, and choking the planet in shit in the process

Whatever way economists attempt to explain the present global crisis, and there are as many explanations as there are economists it would seem, it remains an intrinsic fact that Capital in the form of finance Capital prowls the globe for one thing and one thing only, profit.

The desperation and panic expressed by Ratigan is just another expression of an economist attempting to 'fix it' - this time by calling for a sort of strong man dictator to overthrow a 'bought congress' but conveniently forgetting that Obama is as 'bought' as they are.

Whatever reasons or solutions these commentators are fixated on, Marx WAS right, Capitalism just as with previous economic systems predicated on exploitation and oppression, will not last indefinitely as it becomes consumed within its own contradictions. Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. For many a decade past the history of industry and commerce is but the history of the revolt of modern productive forces against modern conditions of production, against the property relations that are the conditions for the existence of the bourgeois and of its rule. It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property. The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.

Roubini sees this as does Hudson, whatever fix might work in the short term there is absolutely no long-term solution within the current system. Unless we wish to return to the feudalism from which modern Capitalism sprung there'll have to be new solutions that we are capable of imagining. It is precisely this imagination that is lacking within any of these commentators. We are free to imagine though!

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